The CLARITY Act has cleared one of its biggest political bottlenecks after the final rewards language in the bill was made public, giving the crypto industry a compromise it can live with and lawmakers a clearer path to move the broader market structure bill forward.
The compromise matters especially for crypto exchange Coinbase, with Coinbase Chief Policy Officer Faryar Shirzad noting that it is time for the bill to move forward.
The Rewards Fight Now Behind The Industry
Coinbase officials have expressed support for the newest version of the final rewards text in the CLARITY Act that was recently made public. Coinbase CEO Brian Armstrong said on Friday, “Mark it up,” in response to a post made on X by Faryar Shirzad, Coinbase’s Chief Policy Officer.
Interestingly, the most important part of Shirzad’s statement is not just that the final rewards text is public, but that Coinbase is treating the issue as settled enough for the bill to move forward. Much of the debate on the CLARITY Act has been based on how crypto firms can offer yield on stablecoin deposits; however, there seems to be a compromise now.
Although the compromise still prohibits crypto exchanges from offering yield on stablecoin deposits if that yield is equivalent to what banks offer on interest-bearing deposits, Shirzad noted that they were able to protect what matters the most, which is the ability for Americans to earn rewards, based on real usage of crypto platforms and networks.
Basically, rewards tied to what the bill calls “bona fide activities,” which are actual use of crypto platforms or networks, remain permitted. This is why Shirzad described the outcome as a case where banks secured restrictions on rewards, but the industry protected what mattered most.
Coinbase Chief Legal Officer Paul Grewal also reinforced the point, noting that the new language in the bill preserves activity-based rewards relating to real platform participation, which is precisely what the banking lobby had said it wanted.
Where Does The CLARITY Act Go From Here?
The CLARITY Act is a market structure bill designed to answer the biggest legal question hanging over the US crypto industry: when is a digital asset a security, when is it a commodity, and which regulator has authority over the trading platforms?
The major issue in the previous wordings of the CLARITY Act raised by banks was that allowing crypto firms to offer rewards on stablecoin balances would drain deposits from traditional banks and destabilize the lending system.
Now with the yield language settled, the next focus is the remaining provisions that will determine the bill’s final shape. This involves the clarity between the jurisdictions of the SEC and CFTC, staking protections, and capital formation rules.
Galaxy Digital’s head of research Alex Thorn has estimated the earliest the Senate Banking Committee could schedule a markup is the week of May 11, following the Senate’s recess. According to Polymarket odds, there is now a 59% chance that the CLARITY Act will be signed into law this year.
Featured image from Unsplash, chart from TradingView
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